THQ Now Officially Filing for Bankruptcy
THQ, despite its best efforts to claw back some money and raise its stock price, has filed for bankruptcy. In actuality Chapter 11 Bankruptcy; what does this mean? Well Chapter 7 is when you just give up and sell all your assets and any money raised goes to pay off the remaining debts, Chapter 11 however allows THQ to be protected from creditors while it restructures its business and gains additional loans. In short it enables THQ to keep going as an organisation (making games in this case) while trying to find the best way to deal with their debts. However if the amount of debt becomes worth more than their assets then the creditors will end up owning the business.
But that’s not going to happen because Clearlake Capital Group are buying out THQ assets for $60 million. This includes the four studios owned by THQ (Relic Entertainment, Vigil Games, Volition and THQ Studio Montreal) and any IP’s owned by the company. Clearlake Capital Group is even funding part of the development of games currently being made to ensure a smooth transition. This means that Metro: Last Light, Company of Heroes 2, and South Park: The Stick of Truth will be released as planned and work is still progressing on Saints Row 4 and Homefront 2 as well as other unnamed projects. There will be no job losses in the immediate future however after the buyout that could change.
“The sale and filing are necessary next steps to complete THQ’s transformation and position the company for the future, as we remain confident in our existing pipeline of games, the strength of our studios and THQ’s deep bench of talent,” said Brian Farrell, Chairman and CEO of THQ. “We are grateful to our outstanding team of employees, partners and suppliers who have worked with us through this transition. We are pleased to have attracted a strong financial partner for our business, and we hope to complete the sale swiftly to make the process as seamless as possible.”
According to Jason Rubin, who joined THQ as President last May, “We have incredible, creative talent here at THQ. We look forward to partnering with experienced investors for a new start as we will continue to use our intellectual property assets to develop high-quality core games, create new franchise titles, and drive demand through both traditional and digital channels.”
It’s not 100% certain that Clearlake will end up buying out THQ as there are 30 days for a rival investor to make a better offer but one thing is clear; THQ will still be around next year.